McDonald’s announced their earnings today and they mostly disappointed with an 11% drop in revenues when compared to the prior year. This quarter’s decline in sales was the sixth consecutive quarter in which sales have declined and stock investors have taken notice with the stock price declining over the past year despite the overall surge in the market.
The stock price for McDonald’s increased today in connection with an announcement by CEO Steve Easterbrook. Easterbrook announced that the company would be announcing a turnaround plan that they have been currently devising and will release the announcement on May 4th. It was the immediacy of the plan being put in place that appears to have resonated with customers.
Easterbrook has only been in office for 7 weeks but is already making his mark on the company with a plan to make the business more “customer-centric”. McDonald’s stock has suffered as a result of changing customer tastes and what franchisees have called an unwieldy me that attempts to be many things but accomplishes few of the objectives of it.
The fast food industry has been moving towards a higher quality product like Madison Street Capital, that is more natural, tasty, and healthy and McDonald’s has been significantly behind this trend.
Despite the sales reduction, the company was still profitable with earnings per share of $0.84 and strong cash flows. Still, the turnaround and return of McDonald’s dominance is long overdue.